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$1 Billion in Credit Assistance Now Available from EPA’s New Water Infrastructure Program
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On January 10, 2017, the U.S. Environmental Protection Agency (EPA) announced the availability of $1 billion in credit assistance for water infrastructure projects under the new Water Infrastructure Finance and Innovation Act (WIFIA) program. See 82 Fed. Reg. 2933 (Jan. 10, 2017). Congress enacted WIFIA in order to provide low-cost, long-term credit assistance through direct loans or loan guarantees. The program supplements other traditional forms of water infrastructure financing such as State Revolving Fund (SRF) programs and bonds.

Entities interested in applying for WIFIA funding must act fast. In order to be considered in the current round of funding, prospective borrowers must submit formal letters of interest to EPA no later than April 10, 2017. EPA will host informational webinars explaining the process of submitting and evaluating letters of interest on February 9 and March 7, 2017.

WIFIA Overview

Eligible Borrowers

Local, state, tribal, and federal government entities and instrumentalities

Partnerships and joint ventures

Corporations and trusts

State infrastructure financing authorities

Eligible Projects

Wastewater conveyance and treatment

Drinking water treatment and distribution

Enhanced energy efficiency projects at drinking water and wastewater facilities

Brackish or seawater desalination, aquifer recharge, alternative water supply, and water recycling

Drought prevention, reduction, or mitigation

Acquisition of property if it is integral to the project or will mitigate the environmental impact of a project

A combination of projects secured by a common security pledge or submitted under one application by an SRF program

Key Program Features

$20 million – Minimum project size for large communities

$5 million – Minimum project size for small communities (population of 25,000 or less); WIFIA requires EPA to set aside 15 percent of its budget authority for small communities.

Total federal assistance may not exceed 80 percent of a project’s eligible costs

35 years – Maximum final maturity date from substantial completion

Five years – Maximum time that repayment may be deferred after substantial completion of the project

Interest rate will be equal to or greater than the U.S. Treasury rate of a similar maturity at the date of closing

Projects must be creditworthy and have a dedicated source of revenue

Letters of Interest and Applications for Funding

Prospective borrowers must first submit a letter of interest to EPA by April 10, 2017. The primary purpose of the letter of interest is to: (i) validate the eligibility of the prospective borrower and the prospective project; (ii) perform a preliminary creditworthiness assessment; (iii) perform a preliminary engineering feasibility assessment; and (iv) evaluate the project against the selection criteria and identify which projects EPA will invite to submit applications.

EPA will invite selected prospective borrowers to submit an application based on preliminary engineering feasibility findings, a preliminary creditworthiness assessment, the amount of budget authority necessary to provide credit assistance, and the scoring of the eligibility criteria. EPA expects that it “will only invite projects to apply if it anticipates that those projects are able to obtain WIFIA credit assistance.”

Eligibility Criteria

EPA has identified the following project priorities, in addition to geographic and project diversity:

Adaptation to extreme weather and climate change including enhanced infrastructure resiliency, water recycling and reuse, and managed aquifer recovery;

Repair, rehabilitation, and replacement of infrastructure and conveyance systems.

Within the priorities, selection criteria (and relative weight) for this round of funding include:

National or regional significance with respect to the generation of economic and public health benefits – 10 percent

The likelihood that WIFIA assistance would enable the project to proceed at an earlier date than without – 5 percent

Use of new or innovative approaches (energy-efficient parts and systems, renewable or alternate sources of energy, green infrastructure and alternate sources of drinking water through desalination, aquifer recharge or water recycling) – 10 percent

Protection against extreme weather events, such as floods or hurricanes, as well as the impacts of climate change – 10 percent

Maintenance or protection of the environment or public health – 10 percent

Service of regions with significant energy exploration, development, or production areas – 5 percent

Service of regions with significant water resource challenges, including water quality concerns, significant flood risk, issues identified in existing regional, state, or multistate agreements, and water resources with exceptional recreational value or ecological importance – 10 percent

Readiness of the project to proceed toward development, including a reasonable expectation that the construction of the project can commence no later than 90 days after the date on which a federal credit instrument is obligated – 5 percent

Inclusion of public or private financing in addition to assistance under WIFIA – 5 percent

Reduction of other federal assistance to the project – 5 percent

The needs for repair, rehabilitation, or replacement of a treatment works, community water system, or aging water distribution or wastewater collection system – 10 percent

Letters of interest must be submitted no later than April 10, 2017. Prospective borrowers should take action immediately to evaluate their potential WIFIA eligibility and to begin preparing a letter of interest. Developers, designers, program managers, and contractors may want to help identify eligible cities and projects.

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